Buy-to-lets with refurbishment potential

With the changes to mortgage interest relief now taking effect, an inflated stamp duty levy on second homes and the looming abolishment of administrative fees to tenants, property investors would be forgiven for thinking about how best to balance their books.

North West London estate agents London Residential are asking landlords to consider buying properties with refurbishment potential, so they can carry out improvements and add value themselves.

“Opting for a ‘doer-upper’ when purchasing your first buy-to-let or expanding your property investment portfolio brings many benefits,” comments Miles Roberts, Sales Manager, at London Residential. “These include buying at a lower cost with a smaller deposit required, refurbishing the property to a standard that commands higher rents, reducing future maintenance costs and, in the long run, selling for a better profit margin.”

We always have a number of North West London properties for sale that have refurbishment potential - a mix of houses and flats that are ready to be extended, converted, upgraded and modernised. “There is also a strong demand for properties to rent in this part of London, and tenants are expecting high quality accommodation, so a refurbished property is likely to generate a healthy level of interest” adds Miles.

North West London estate agents London Residential have put together some helpful tips for landlords considering a property ripe for refurbishment:-

Location, location, location: Purchasing a property in a good area is a must, and they don’t come much better than North West London. While demand here is always high, we believe there’s still room for growth and that’s key to maximising returns.

Look at the property’s potential: If a property is in a sorry state now, think about what can be done to improve its value and to appeal to tenants. Does it need a parking space? Does it need an extra bathroom? Could it do with an extension? Sometimes it’s the ‘nuts and bolts’ refurbishment jobs – not the aesthetic ones – that add the most value to a property to rent, such as a new boiler, new radiators and new windows.

Doing the sums: Working out the cost of a refurbishment and the likely return on your investment is crucial. London Residential would be happy to advise on how much similar properties have sold for once refurbished, and provide historical house price data and rental trends in local neighbourhoods to give you an idea of what you may recoup. Don’t forget, every month you spend refurbishing a property, you’ll lose a month’s rent and probably still have a buy-to-let mortgage to pay. If you want to find out more on what yield you can expect based on the value of the property and rent, look at London Residential's investment calculator.

All in proportion: While you might feel that adding an extra bedroom will add to the property’s overall price, this is not necessarily the case. People would rather rent a three-bedroom house with two bathrooms than a four-bedroom house with one, so it is important to keep things in perspective. Consult with a good local estate agent as to what tenants are looking for.

DIY vs the professionals: If you are a DIY expert or a trade professional, then doing it yourself is a great way to add value and save money. If you are not that way inclined, it will be cheaper to research and find some professionals that can do the job for you. It beats bodging a job yourself and having to pay for the mistake to be rectified, paying twice over in the process for materials and products.

Thinking outside of the box: If you are really keen to increase the size of a property, then going up or down via a loft extension or basement is a possibility. Installing a garden room or converting a garage can also reap rewards but if the area is problematic for parking, a garage might be valuable asset, so act with consideration.

For the latest run-down residences and dated dwellings in North West London that are crying out for some TLC, contact London Residential or browse our online listings.